Question: Notable Nothings plans to issue new bonds with the same yield as its existing bonds. The existing bonds have a coupon rate of interest

Notable Nothings plans to issue new bonds with the same yield as

Notable Nothings plans to issue new bonds with the same yield as its existing bonds. The existing bonds have a coupon rate of interest equal to 5.6 percent (semiannual interest payments), 12 years remaining until maturity, and a $1,000 maturity value; they are currently selling for $918 each, (a) If Notable issues new bonds today, what will be its before-tax cost of debt? (b) What will be its before-tax cost of debt if the price of its existing bonds is $730 when Notable issues the new bonds?

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